Auditor's Opinions: Types and Implications

Types of Auditor Opinions

Unqualified Opinion

An unqualified opinion is issued when:

• The audit was performed without limitations in scope and in accordance with the National Technical Standards (NTA).
• The annual accounts have been prepared in accordance with accounting rules and Generally Accepted Accounting Principles (GAAP), consistent with prior years.
• The information, including supporting documentation, is sufficient for adequate comprehension.
• The financial statements, taken as a whole, fairly represent the company's business in accordance with the information available to the auditor.

Qualified Opinion

A qualified opinion is issued when the auditor concludes that there are significant circumstances that prevent the annual accounts from presenting a true and fair view. These exceptions include:

• Limitations in the scope of the audit.
• Failure or breach of accounting rules and GAAP.
• Uncertainty.
• Changes in accounting principles and standards applied.

Adverse Opinion

An adverse opinion means that the annual accounts, taken as a whole, do not fairly represent the assets, financial position, results of operations, or changes in financial position of the entity in accordance with GAAP standards.

Disclaimer of Opinion

A disclaimer of opinion is issued when the evidence obtained by the auditor is not sufficient to form an opinion on the financial statements taken as a whole. In this case, the auditor must state that it is not possible to express an opinion on them.

Specific Situations Affecting Opinions

• Justified Qualification: The auditor shall state in the opinion paragraph that there is a caveat to the uniform application of accounting principles and standards.
• Non-Compliance with GAAP: A failure to comply with GAAP standards shall result in a relevant qualification in the report.
• Inability to Verify Uniformity: This is treated as a scope limitation.

Audit Report Components

Audit Report on Annual Accounts

This is a commercial document that shows the work done by the auditor and their professional opinion on the accounts in accordance with the law of audit of accounts and auditing standards.

Comparative Paragraph

This paragraph refers to the annual accounts of a financial year and must include a statement, after the scope paragraph, indicating that the audited accounts are those of the last financial year.

Emphasis of Matter Paragraph

This paragraph is used when the auditor should emphasize a matter relating to the accounts, but it does not imply any exception in their opinion and therefore should not be referred to in the opinion paragraph.

Paragraph on the Management Report

This paragraph consists of checking that the accounting information obtained is consistent with the financial data of the entity that served as the basis to prepare the audited annual accounts.

Opinion Paragraph

The auditor clearly states their opinion on whether the annual accounts give a true and fair view of the financial position of the entity (assets and liabilities), results of operations (profit and loss account), and the resources obtained during the year (financial table), all in accordance with standards and GAAP.

Paragraph of Caveats

If there are exceptions, the auditor shall state the reasons justifying them in detail between the scope paragraph and the opinion paragraph. The auditor should specify the effect of the proviso in the annual accounts, identifying the nature of the exception if it is not quantifiable.